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Cautious investors could consider starting with tracker funds - these products follow a set index and are typically a low cost way to start investing.

They have seen strong growth in the last few years: currently £1 in every £8 invested in funds, according to Hargreaves Lansdown.

Adam Laird, passive investment manager said: "Tracker funds are probably the most straightforward investment for a Stocks and Shares ISA.

"In one trade you can buy a whole portfolio. Because they track an index there is no risk of choosing a failing fund manager.

“Trackers are growing from strength to strength. 2015 was a record year I expect to see more records broken in 2016.

"Recent volatility has created buying opportunities – markets are down 20 per cent from their peak, this could be a good entry point for a long term investor.”

Top tracker funds in Hargreaves Lansdown’s Stocks and Shares Isa, include the Legal & General UK Index, which follows the FTSE All Share index and covers over 600 large, medium and small companies and for more adventurous investors, the HSBC FTSE 250 Index covers mid and smaller companies.

Also featured is the Legal & General US Index, which tracks the FTSE USA index, covering over 600 shares including many global leading companies. The US and is a top market for tracker fund investors, as most active managers fail here.

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Actively managed funds

For investors willing to pay more for funds in the hop of higher returns, an actively managed fund could be the way forward - but beware as many fund managers are not worth the money they are paid.

Andy Parsons, head of investment research at The Share Centre, said: “For those investors seeking a very specific sectorial investment, the AXA Framlington Biotech fund may be worth consideration.

"Demographically, the world is continually changing, and emerging economies now need to tackle many of the diseases and illnesses that the Western world has faced for a number of years."

He added: "Both the biotech and healthcare sectors have seen a strong sell off but we are still of the opinion that the overall investment theme has strength and longevity despite the recent underperformance.

"Given the uncertainty already experienced in markets in 2016 and with the potential for further rate rises in the US and a presidential election, markets are likely to remain volatile, however our needs and desire for advancements in treatments is not abating.”

Mr Parsons also picks out the CF Miton UK Value Opportunities for investors seeking a fund with the potential to offer rewarding growth opportunities predominantly through UK exposure and the Fundsmith Equity Fund as globally focused offering.

He added: "The Fundsmith Equity Fund is a true global offering, managed by one of the industry’s most respected leading managers and founder of the business, Terry Smith.

"With a long-term ‘buy and hold’ strategy, this highly concentrated fund is a shining example of high-conviction investing, unlike many others which aspire to this investment philosophy.

“The fund has a preference for defensive companies that are resilient to change, technological innovation and who have existing advantages that are difficult to replicate.

“To feature in the fund, companies must have conviction in growth from reinvestment of cash flows and must not require significant leverage to generate returns.

“Due to the fund’s global nature and its focus on defensive companies, investors should not be surprised to find it contains a strong US presence and a raft of household company names.”